New Requirements for Eligible Financial Institutions Effective September 1, 2011
Amendments to Rule of Professional Conduct 1.15 will change the definition of eligible financial institutions effective September 1. Under the new amended rule:
- Financial institutions that want to be eligible to hold any lawyer trust accounts must agree to report trust account overdrafts to the Attorney Registration & Disciplinary Commission (ARDC). (See Rule 1.15(h).) Financial institutions must submit a written overdraft notification agreement to the ARDC. More information is available on the ARDC web site.
- Financial institutions that want to be eligible to hold IOLTA deposits must continue to offer IOLTA accounts within the requirements of Rule 1.15(f), which are summarized on this page.
|
Financial Institution Certification Process
In January 2007, the Supreme Court of Illinois amended Rule 1.15 of the Illinois Rules of Professional Conduct (“IOLTA Rule”) to require that attorneys and law firms can only hold their pooled client trust accounts (“IOLTA accounts”) in banks that meet the following eligibility criteria:
- The financial institution are now required to pay comparable rates on IOLTA and non-IOLTA accounts with similar balances and requirements;
- The financial institution can assess only reasonable service charges on IOLTA accounts.
- The financial institution cannot engage in “negative netting,” i.e., deducting fees charged in excess of the earnings accrued on an individual account from the earnings accrued on other IOLTA accounts.
- Eligible financial institutions now include banks and savings banks insured by FDIC, as well as Investment Companies that register with the SEC who offer money market funds collateralized by US government obligations.
To be certified as an eligible financial institution, a financial institution must submit one of the following forms to the Lawyers Trust Fund of Illinois:
Form A: Safe-Harbor Certification Statement (PDF)
Form B: Application for Certification (PDF)
The Lawyers Trust Fund will review submissions from financial institutions as received. Financial Institutions submitting Form A and paying the “safe harbor” rate are automatically determined to be in compliance with the interest rate requirements of the revised rule. Financial institutions submitting Form B will be evaluated based on their other product offerings, and additional information and documentation may be required prior to final approval.
Financial institutions will be listed as approved depositories on the Lawyers Trust Fund website as they are certified.
|
